IBM missed analysts’ estimates for third-quarter revenue on Wednesday, hurt by weakness in its consulting segment as businesses cut back on discretionary expenses, coupled with declines in the infrastructure business.
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IBM’s shares fell about 4 per cent in extended trading after rising more than 40 per cent this year, as investors bet on the company’s potential to benefit from generative AI through its software and consulting services.
An uncertain macroeconomic backdrop has prompted businesses to prioritise expenses on long-term consulting projects centred around AI, impacting IBM’s sales from shorter-term deals.
“A pause in discretionary spending is impacting our consulting business,” CEO Arvind Krishna said during a post-earnings call.
Revenue grew about 1 per cent to US$14.97 billion, missing estimates of US$15.07 billion, according to data compiled by LSEG. Revenue from consulting was relatively flat in the third quarter.
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